Trade Secret and Employee Mobility

In a world in which confidential information is increasingly shared and stored digitally, and where the places information and data can reside are proliferating rapidly, trade secret and employee mobility counseling and litigation have become a substantial part of our firm’s practice and of the services we offer to our clients. Employees are telecommuting, working on tablet computers while traveling, file sharing through cloud-based storage providers, collaborating across offices and companies on wikis, and living life 24/7 on mobile devices. This has created complex challenges both for companies seeking to protect their trade secrets and for those seeking to avoid receiving or using other companies’ trade secrets.

Munger, Tolles & Olson has developed strong emphasis in trade secret law and the related issues associated with employees who move from one competitor to the next. We represent companies and individuals across industries in a wide variety of trade secret and employee mobility cases. With a deep bench of attorneys experienced in these matters, Munger Tolles is at the forefront of protecting and defending the rights, intellectual property, and financial security of organizations embroiled in these complex legal situations.

Counseling to Protect Against Trade Secret Disputes

Our practice is focused on solutions to try to avoid problems and disputes over trade secrets.

  • We work with our clients to develop trade secret protection programs to avoid the loss of trade secrets. This includes working with our clients to adopt human resources and employment policies such as putting in place confidentiality agreements and privacy policies, limiting use of personal email at work, addressing technical protections such as disabling the use of removable storage devices on company computers, and training employees on the proper treatment of confidential information.
  • We work with clients who are involved in active acquisition discussions, business partnerships, and partnership negotiations to ensure that they have taken the appropriate measures to protect confidential information exchanged during those relationships and discussions.
  • We develop “on-boarding programs” for clients to use with new employees to avoid problems associated with mobile employees bringing confidential information from prior employers into the new workplace. We institute these policies company wide, and we also work on a case-by-case basis when faced with a particularly sensitive or high-profile hire from a competitor.

Internal Investigations and Litigation

Even with the best counseling and preparation, disputes do happen. When they do, we work quickly and effectively to investigate and/or litigate. Trade secret disputes often occur with little or no notice and require a rapid response with an experienced team to address the issues and develop a strategy appropriate for the client’s situation. Our attorneys have a wide range of experience with internal investigations, negotiating resolutions with adverse parties, litigating as plaintiffs and defendants, and taking the case through preliminary injunction proceedings, jury trials, and the appellate process.

For companies who have lost employees to competitors and suspect that trade secrets have been taken on the way out the door, Munger Tolles will work with clients to investigate the severity of the potential problem promptly and to develop a solution to protect the clients’ rights and property. Similarly, business relationships often involve sharing confidential information between companies pursuant to confidentiality agreements or non-disclosure agreements. When a client suspects that there has been a breach of such an agreement, we work with that client to develop a strategic plan of action to protect the information. Whether the solution involves negotiating with the former employee or the company who has received information, or filing litigation to enforce the client’s rights, Munger Tolles works with the client throughout the process to provide a solution to the loss of valued information.

For companies who have hired employees from competitors and have been accused of taking and using confidential information, Munger Tolles works with clients to conduct internal investigations in to potential trade secret disclosure or use and to develop solutions to address potential problems before they turn into litigation. If and when our clients face litigation, Munger Tolles has an experienced team ready to jump into action in federal or state court in response to temporary restraining orders and the litigation that ensues in trade secret cases.

We also have experience in litigating issues related to non-competition agreements and non-solicitation agreements. We have litigated issues related to the enforceability of these restrictive covenants and have developed an expertise in choice of law issues as they relate to efforts to enforce out-of-state non-competition agreements in California.

Key Experience

Munger Tolles has represented:

  • DoubleLine Capital and certain of its founders, including its CEO Jeffrey Gundlach, in winning a $66.7 million jury verdict in favor of Gundlach against his former employer, Trust Company of the West (TCW), on his cross-complaint. TCW originally brought suit against Mr. Gundlach and his company, claiming breach of fiduciary duty, trade secret theft and tortious interference in connection with a large scale departure of employees to DoubleLine after Mr. Gundlach was fired. The jury awarded no damages on TCW’s complaint against DoubleLine and the individual defendants.
  • ABC in successfully defeating an injunction sought by CBS which aimed to shut down ABC's new reality show "The Glass House" based on allegations that former CBS employees who worked on "The Big Brother" misappropriated "trade secrets" related to reality show programming and used those secrets in producing "The Glass House." CBS ultimately dismissed the case with prejudice.
  • Playdom in settling hard-fought trade secret litigation involving the departure of nine employees from the world’s largest social gaming company, Zynga Inc. The case involved a detailed investigation into allegations of theft of trade secrets and cutting edge forensic analysis of evidence on computers, cloud-based technologies, and social networking sites. The case ultimately settled following a multi-day preliminary injunction hearing in Santa Clara Superior Court.
  • A large packaged goods company in an investigation into a high-level sales person’s departure for a competitor. Based on that investigation, we filed a lawsuit in Los Angeles Superior Court. The investigation included a detailed forensic analysis of the departed employee’s computer and related evidence followed by successfully and promptly obtaining a stipulated restraining order based on that information.
  • Edgewood Partners Ins. Center (EPIC), an insurance brokerage firm, in defeating efforts by a well-financed and global competitor to obtain injunctive relief for alleged corporate raiding and trade secret theft when approximately 50 employees left Gallagher, a rival insurance brokerage firm, for EPIC within a few days. Our investigation of the matter included forensic computer analysis and interviews of more than 40 employees.
  • A high level Silicon Valley executive in litigation over the enforceability of a non-competition agreement. Obtained favorable settlement that allowed executive to commence work at new job.

Contact:
Carolyn Hoecker Luedtke (415) 512-4000
Mark B. Helm (213) 863-9187